Every valid price action must have a base ( some level confirming). I saw two black candles with long bodies with rage greater than distance between London R\S. Also with shadows ( first one and some earlier ) rejecting high. What’s more important our daily high is a little bit lower. Even with divergence I decided not to trade. Of course if I see test of this divergence setup by another engulf I think about trade ( look at day earlier and assume that there was divergence by first engulf ). Later it was nice pullback and signal. I don’t need more solid base than daily high ( change of polarity ). Take also notice that players like to set SL or TP in this level ( see today E\U ). If I ever lost I want it on setup like this.
From now on I will post only losing trades and trades that I don’t want to take ( bad signals ) for next 4 weeks. I know that my level of English is not sufficient to explain things like I want . I’m open to any proposition of modifying system and suggestions . Natural variation of this strategy is Scalp with False London breakout ( with some different conditions ). But This is future matter so for now we concentrate on this strategy for next 4 weeks.
So far your results have been very good and if others can get those results I don’t know why anyone would bother with a variation of this system. However, I can only suggest you don’t change the system on this thread, If you are going to do a variation, you should start a new thread.
Don’t worry I`m not going to change system rules ( no reason so far ). Other variation definitely will be posted as new tread. What I mean is that ( like I write in first post ) this is my official system testing so If someone came up to improve, upgrade system I am willing to modify it.
Attached is GU from yesterday. I’ve indicated where I see the reversal took place after break-out, however there was no great candle formation, or divergence. Is this where you took the trade? It is at the day before’s low, would this give you extra confidence in taking a trade without divergence etc?
UJ I see it as much the same. The long trade I see as much the same as GU i.e. no great candle formation, no divergence. Is this the trade you are talking about?
Ah ok I see where you have the divergence on UJ - I only usually look to the previous peak / trough on the Stoch, rather than including the previous one as well - guess this is what you refer to as the “3 top / bottom divergence”?! - another lightbulb moment!!.
Be interesting to see how you traded UJ today as that daily high / change of polarity i.e. Resistance turned Support you indicated has come into play again today - I saw a nice long trade earlier, but that area was “in the way” of an 1:3 trade - price did break through it, but would you have entered…
Nice trade on GU though. Previous daily high / change of polarity area, engulfing candle, and I believe we could say divergence based on “3 bottoms” rule? Also notice I’ve got the daily pivots on there as I’m seeing if these can help in establishing / confirming areas of entry, and also for setting targets as price tends to adhere to these areas on an intra-day basis - obvious statement to those who use Pivots all the time, but I’ve only just started working them into my trading!! Notice today price turned at the Daily Pivot, and then bounced off R1 - so a 1:4 trade (based on 25pip SL i.e. bottom of the englufing?). Work in progress on that though.
EU just been choppy today so I don’t see a trade there, but EG was also a very nice short trade by looks of it - so a great day from what I can see!!
Update on EG - have updated chart, notice it hit S1, as well as this being a previous area of heavy support i.e. “big boys” order area - giving a 1:6 trade. So another example of how we could perhaps look to tune the way targets are picked using Pivots / significant S/R areas- if we’re not happy enough with 1:3 that is!!
We said that 3 top divergence has occur when : Indictor (stoch,macd) tops must descending with each other ( A<B<C or A>B>C ) .
U\J :I trade with first setup ( early one ). I was confident because : main trend is up( I count on bounce of daily moving avarege), 3top divergence, area of daily support. When price move to second area ( change of polarity ) I move stops to BE. Sadly price hit it ( but there was chance to reenter ). Check attached picture to see S/R zone.
G\U: Nice trade indeed.
I think using pivot points could be smart idea for confirmation setup or to set level of TP. Will see in time.
From what I can see we had one good trade today (UJ), and one (GU) failed trade, but which was against trend - be interested to see what your comments on GU are Kodziro. You mentioned using ADX to determine whether an against trend trade is valid but haven’t seen you using it yet - as it’s not an indicator I use would be good to how it does get used.
GU - looked to be a short setup, with bearish engulfing and divergence. But against H4 trend though, and had yesterdays high to contend with i.e. polarity change area. Would have been a failed trade, but perhaps this was because of news which sent it flying up at 09:30. Would you have taken this trade Kodziro? Update - missed out a second possible short trade area as indicated on the updated chart - believe this was 3 top divergence, with a fairly strong couple of bearish candles in there (pin bar first, then formed an Evening Star after another couple of candles. Against trend though again - how do you see this (failed) trade??
EU - no trade, didn’t get near asian low and no reversal at asian high.
UJ - Nice trade, bullish engulfing, divergence, with trend. Notice it hit R1 - so a 1:5 trade if this used as target.
EG - no trade as had reversal candle, but no divergence, and would have been against trend.
I used today ADX. I spot divergence on G\U. Sadly it wasn’t win trade. But what’s interesting is that I saw some time ago almost copy of that setup on 10.06.09( compare attached pictures ) . Price behave almost identically (not price direction ). Only difference was that earlier main trend was down (daily MACD was negative) and today was not. Later on I didn’t think to enter – because breakout occur and we had too long distance to box.
It is said that if ADX line is below 25 level and break it and trending up probability of breakout is raising.
Maybe this two fact ( against trend , ADX ) should be sign for not to trade this setup. My mistake.
U\J it was win trade and price hit pivot R1. Really nice.
Technical thing : I have noticed that you miss one candle at 8 GMT ( see rules – when we drawing box ).
Today we had two trade opportunity on E\U, G\U. Both without divergence but with trend and daily high ( polarity change). So again we were waiting for test our signal ( by candle formation ).
G\U test by large engulfing candle pattern ( too large and distance between our signal was huge). So we didn`t trade although it was win trade ( if we use our max SL=25)
E\U test by hammer confirming our signal in a nice place. So we did trade.
Nice trades again Kodziro, I wasn’t around yesterday to take part. So you wouldn’t have / didn’t take the trades at the first signals? I thought that you would have had 3 out of the 4 reasons on your checklist to take the trade, and you only usually look for 2? I know you’ve taken trades before without divergence, why not this time? When do you wait for a re-test please?
GU and EG are going to be definite no trades today though after that GBP news!!
G\U: Look at price strength movement. It was very strong ( after news- with rejection of higher levels ). These keep me out of trades. Maybe nice candle formation would force me to trade it. ( and keep in mind our max SL, sometimes test create better opportunity to trade and fit to our money management )
E\U: I think I should take trade by nice engulf ( had 3 reason completed ).
I don’t know why price acting so nice to us lately. ( like never before -3 months I fallow this strategy).
If think we should wait for confirmation test ( div not occur ) only if :
1.against trend
2. price don’t cross ( touch ) daily low/high.
PS. G\U today had divergence ( in 4H, and 15M although not so clear ), test daily high ( polatity change ) and realy nice price action.
Yes I saw the divergence on 4hr today, but not on 15min when it tested the asian high. Had also hit the 1.61 extn of last major swing on the 4hr, almost to the pip. So some good reasons for to head south anyway, despite the news. But would have been against trend trade on the 15min, and as I say didn’t really see divergence on there?
How have the previous months been then - what kind of win / loss ratios have you been having if you say that recent price action isn’t as you’ve experienced before?
